The surprise of the Independent Intelligence Review: economic security

After copping criticism for not releasing the report for nearly eight months, Prime Minister Anthony Albanese released the Independent Intelligence Review on 28 March. It makes for a heck of a read. The review makes 67 sweeping recommendations to overhaul Australia’s National Intelligence Community (NIC) on everything from legislation to oversight, open-source intelligence and investment.

But hidden in plain sight in the review is a surprising recommendation that Treasury lead a review relating to ‘economic security’.

That’s a surprise because Australia hasn’t really talked about economic security before. There isn’t a federal policy on achieving economic security, our ministers don’t address economic security in press releases, and it remains a bit of a foreign concept in Parliament.

The review doesn’t stop there. Authors Heather Smith and Richard Maude—both well-known figures in Canberra—say their ‘consultations suggest that more holistic and structural changes across the public service are required’. Two more key recommendations were to establish a dedicated economic security unit inside Treasury and embed members of the NIC in economic security policymaking.

One wonders why the government hasn’t done this already.

It’s because Australia’s security has historically been about its military. As an island nation in the Indo-Pacific, we’ve been forced to use our privileged location to achieve political and diplomatic advantage. We’ve had defence white papers for decades calling for more spending, more alliances, more things. Look no further than the 2023 Defence Strategic Review. Australia’s security was said to be linked to our alliance with the United States and achieving force projection, meaning spending billions of dollars on long-range missiles and nuclear-powered submarines.

Now, it seems the government has finally stopped thinking military power alone will cut it in this degrading geopolitical environment.

In his budget speech, Treasurer Jim Chalmers seemed to glibly admit that ‘in these uncertain times, economic security and national security are increasingly intertwined’. His Future Made in Australia Act, passed in December last year, is the first specific mention of economic security by the Commonwealth ever. The National Reconstruction Fund has finally started handing out some of its $15 billion of investment funding.

But we have a lot more work to do.

A 2024 report by the United States Studies Centre shows that Australia is well behind our closest allies. We don’t conduct outbound investment screening, as the US does, or ban investments with entities that could compromise our research and development, as Canada does. Our investment review bodies don’t seem to have actual teeth like the ones in Britain do, and unlike Japan we don’t have an economic security law.

Don’t forget, a former treasurer (advised by our Foreign Investment Review Board) took no action against a 99-year lease given to Chinese company Landbridge to operate the Port of Darwin. That decision is still haunting the corridors in Canberra today.

Australia needs leadership on economic security and it needs it now, or certainly after the election.

We need to beef up our existing legislation to protect Australian investment from both internal and external threats to our economic security. We don’t even need new levers; we just need to use the ones we have. In the past, we have arguably prioritised investment over security, instead of attracting investments that offer both. For those that we deem contrary to foreign policy, our foreign minister already has the power to cancel any foreign agreements—they just haven’t wanted to.

The Foreign Investment Review Board needs to be given the teeth—and, more importantly, the political capital—to make hard decisions about investment in Australia. The current review of the board is a fantastic opportunity change our inbound and outbound investment framework. Making the board independent from Treasury would go a long way to achieving that, as would a broader ability for it to call in and review investments that could pose security risks, rather than await applications.

More broadly, the NIC needs to be integrated not just with Treasury, but with industry and academia, where technological breakthroughs fuelling our economic growth are being made every day. Having a dedicated economic security policy would probably help too. And we can do all of that without resorting to protectionist or xenophobic responses such as banning whole countries from doing business.

Economic security is not a new concept, but we are definitely late to the party. Hopefully, no matter which government is elected in May, economic security doesn’t prove to be just another election buzzword.